Question : Multiple Choice Questions 71. The costs of bringing a corporation into existence, : 1225294

Multiple Choice Questions

71. The costs of bringing a corporation into existence, including legal fees, promoter fees, and amounts paid to obtain a charter are called: 

A. Minimum legal capital.

B. Stock subscriptions.

C. Organization expenses.

D. Selling expenses.

E. Prepaid fees.

72. The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a: 

A. Preemptive right.

B. Proxy right.

C. Right to call.

D. Financial leverage.

E. Voting right.

73. Buying stock in a corporation is attractive to investors because: 

A. Stockholders are not liable for the corporate acts or debts.

B. Stock is easily transferred.

C. A corporation has unlimited life.

D. Shareholders are not mutual agents of the corporation.

E. All of these.

74. A proxy is: 

A. A document that gives a designated agent of a stockholder the right to vote the stock.

B. A contractual commitment by an investor to purchase unissued shares of stock.

C. An amount of assets defined by state law that stockholders must invest and leave invested in a corporation.

D. The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation.

E. An arbitrary amount assigned to no-par stock by the corporation’s board of directors.

75. The board of directors of a corporation: 

A. Are elected by the corporate registrar.

B. Are responsible for day-to-day operations of the business.

C. Do not have the power to bind the corporation to contracts, due to lack of mutual agency.

D. May not also be executive officers of the corporation, due to the separate entity principle.

E. Are responsible for and have final authority for managing corporate activities.

76. The number of shares that a corporation’s charter allows it to sell is referred to as: 

A. Issued stock.

B. Outstanding stock.

C. Common stock.

D. Preferred stock.

E. Authorized stock.

77. Par value of a stock refers to the: 

A. Issue price of the stock.

B. Value assigned per share of stock by the corporate charter.

C. Market value of the stock on the date of the financial statements.

D. Maximum selling price of the stock.

E. Dividend value of the stock.

78. When all of the authorized shares have the same rights and characteristics, the stock is called 

A. Preferred stock.

B. Common stock.

C. Par value stock.

D. Stated value stock.

E. No-par value stock.

79. In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the: 

A. Par value of preferred.

B. Minimum legal capital.

C. Premium capital.

D. Stated value.

E. Working capital.

80. The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is: 

A. Always equal to its par value.

B. Always equal to its stated value.

C. Referred to as paid-in capital.

D. Referred to as retained earnings.

E. Always below its stated value.